Avoid estate planning errors

Lack of foresight can cause many costly and time consuming problems when planning an estate.

You can save a fortune by avoiding them.

First of all it’s important to select a qualified trustee. For example, Rosita, a hard-working, 54-year-old, divorced mother of one child, died recently after a long battle with AIDS.

Fortunately, she had revised her estate plan after her divorce, removing her former husband as the beneficiary, personal representative and trustee. Rosita named her daughter, a junior in high school, as the sole beneficiary and named her best friend Carly as executor and trustee.

Carly had no experience managing a trust, nor was she equipped to handle the conflicts were expected to arise with the ex-husband. Rosita probably should have named an institutional trustee but she insisted on naming Carly, whom she trusted.

After Rosita died her ex-husband hired a lawyer and demanded control over the estate, claiming he would do a better job than Carly in managing the trust funds for his daughters benefit.

Noting that he was insolvent, at Carlys request, attorneys eventually convinced the ex-husbands lawyers that he could not possibly win the battle. But the ex-husband conceivably could cause more trouble down the road. This was all too much for Carly. She resigned as trustee and gave the job to the successor trustee, a large financial institution.

If there is a chance of a conflict or dispute among family members, appoint an institutional trustee or someone who is capable, experienced and resolved to carry out your wishes. Your best friend may feel honored to be appointed, but the work of resolving conflicts can be substantial, not to mention the work of investing, managing and distributing trust funds.

In a second example of the importance of name a qualified trustee, Howard was in the hospital being treated for cancer when he decided to amend his will, something he had meant to do for a number of years.

His lawyer brought the documents to the hospital and Howard signed them, witnessed by two of the lawyers assistants. Howard died suddenly soon after. A disgruntled heir challenged the amendment in court, claiming that Howard had been incapacitated while in the hospital and was not competent to amend his will.

Howard should have amended his will years earlier when there was no question about his competence. In this situation, the lawyer could have brought two witnesses in the healthcare or social services fields, who could testify authoritatively as to Howards competence. Better yet, the lawyer could have videotaped the signing to prove his clients competence.

Some conflicts and problems are simply unforeseeable. However, in most situations, it makes sense to ward off potential problems before they arise. It is indeed better to be safe than sorry when it comes to estate planning.

Scott Halvorsen is a local attorney residing with his family in Bunkerville. He is licensed to practice in Nevada and Utah. He works at Barney McKenna amp; Olmstead, Mesquite’s business and estate planning law firm. He can be reached at 346-3100, at www.barney-mckenna.com or at 590 W. Mesquite Blvd., Suite 202A.